‘Nigerian oil firms can execute 80% of engineering design’

Nigerian oil and gas service firms have the capacity to execute over 80 per cent engineering designs in-country, Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, has said.

He said this while delivering the keynote address at the just-concluded maiden edition of the Nigeria Oil and Gas Industry Research and Development Fair and Conference. It was organised by NCDMB in Lagos.

According to Wabote, the forum formed part of the Board’s initiative to re-energise the research and development aspect of the local content practice. He listed five key parameters for sustainable local content practice.

He said:“There are five key parameters for sustainable local content practice. First is an enabling regulatory framework backed with the appropriate legislation is key rather than use of directives or policies that are subject to speculations or compliance on ‘best endeavour’ basis. In Nigeria, we have the NOGICD Act 2010 in place. It is no longer optional or debatable whether to comply. The Act established NCDMB as the sole agency for local content implementation in the oil and gas industry and has set minimum targets in 278 services across oil and gas value chain to enhance local capacity development

“The second parameter is capacity building. Structured capacity building intervention is essential to spur domiciliation of capabilities in-country. This is not limited only to local manufacturing and infrastructural development, but also includes need for human capacity development. Our capacity building interventions in NCDMB have increased the in-country value retention from less than five per cent before the NOGICD Act to the current 26 per cent.

“Since the Act came into effect, we have developed two world class pipe-mills and five pipeline coating plants, grown fabrication capability to over 60,000 metric tonnes per year, and we now have the capacity to carry out over 80 per cent of engineering design in-country. We have created over 30,000 direct jobs, delivered over six million training man-hours, witnessed the award of over 90 per cent of contacts to Nigerians, witnessed the growth of successful indigenous operators, put in place facility for floating production, storage and offloading (FPSO) integration, among others.

“The third parameter is gap analysis. Periodic gap analysis is essential to determine gaps that needed to be closed in the areas of skills, facilities and infrastructure. The oil and gas industry is a very dynamic one. Regular reviews of local content targets reveal where capacities have been met and where there is over-capacity to guide deployment of resources and investment decisions. Periodic internal gap analysis is also important as we have done with our internal process reviews and development of a 10-year strategic blueprint to position the Board in effective delivery of its mandate

“The fourth parameter is the provision of funding and incentives. Fiscal and monetary incentives are essential to attract new investments and keep existing businesses afloat where required. In partnership with Bank of Industry, we recently launched a $200 million intervention fund for our Nigerian oil and gas service providers that are contributors to the Nigerian Content Development Fund. The intervention fund has all-in single digit interest rate of eight per cent for loans extended to Nigerian oil and gas Service providers and all-in single digit interest rate of five per cent for loans extended to community contractors.

“The last but not the least of the parameters for sustainable local content practice is Research and Development. Local content thrives where there is robust research and development (R&D) guideline to drive development of home-grown technology.”

Wabote described R&D as the bedrock of innovation. “It is essentially an investment in technology and future capabilities, which is transformed into new products, processes and services. History teaches us that such investment, and such commitment to discovery, lead to prosperity.”

According to him, some countries have done very well in these two aspects of R&D. Countries such as South Africa, China, India, United States, South Korea and Singapore, he said, are examples of countries that have developed a world-class R&D capacity. Governments in these countries directly support scientific and technical research.

“For example, in recent years, spending on R&D has increased sharply in Brazil. R&D expenditure of Brazil increased from one per cent in 2004 to 1.2 per cent in 2013. In 2016, Brazil spent 1.4 per cent of its GDP on R&D that is about $25 billion in a year,”he said..